Trump’s ‘Big Beautiful Bill’ Slaps $250 Annual Fee on EV Owners – Are You Affected?

If you already have an electric vehicle (EV) or are thinking of buying one,hen this news is very important for you. More than 3.5 million EVs have been registered in the US at present, and 3 lakh new electric vehicles were sold in the first quarter of 2025 alone.

But now under a new bill ‘One Big Beautiful Bill Act’ introduced by Republican lawmakers, a new tax of $250 (about ₹20,000+) can be collected from every EV owner annually. There is a plan to raise $800 million (about ₹6,600 crores) every year from this tax, so that the Highway Trust Fund can be supported.

The government says that as people are adopting EVs by leaving petrol and diesel, the revenue of traditional gas tax is decreasing, so EV owners should also ‘pay their share in the system’.

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“EV owners also use the roads, so they should pay the same tax” — House Transportation Committee Chairman Sam Graves EV tax is not a new thing

This idea is not new at all. EV tax is already applicable in many states of America.

• $100 per year in California, Illinois
• $250 per year in New Jersey
• This model is now being prepared to be implemented at the federal level.
• This tax will be applicable to all EV owners, regardless of when they bought the EV.
• Not only this, those who own hybrid vehicles will also have to pay a tax of $100 per year.

The Trump-Musk dispute has further fueled this issue

The rhetoric between Donald Trump and Elon Musk has also intensified regarding this bill. Musk has called this bill a ‘disgusting abomination’. At the same time, Trump replied on Truth Social that Musk is angry because the bill has a provision to end the EV tax credit, which can cause huge losses to Tesla.

House GOP Passes $250 EV Tax — What Are the Impacts?

This is a major tax and spending bill that has yet to pass the Senate.

If it becomes law:

• The Federal Highway Administration (FHWA) will collect the tax.
• The purpose of the tax is to make sure EV drivers contribute to the Highway Trust Fund just like gasoline/diesel vehicles do.

But is the tax fair?

• The current federal gas tax is just 18.4 cents per gallon (it’s been that way since 1993).
• The average gas car owner pays $75-$80 annually in taxes.
• That means the new $250 EV tax is three times more!
• If it becomes law, the tax will go into effect immediately, with the FHWA having to work out a collection process.

3 major changes that are included in the bill:

• EV tax credit will be eliminated
• So far, a tax credit of $7,500 is available on new EVs.
• This credit will be gradually phased out after 2026.
• The $4,000 tax credit on used EVs will be discontinued after 2025.

Tax deduction on car loan interest

• If you take a loan on a new car between 2025-2028, you will get an interest deduction of up to $10,000.
• But this exemption will be only for vehicles that are assembled in the US.
• This will apply to single filers with income up to $1,49,000, and joint filers with $2,49,000.

Hybrid vehicle tax: A new $100 annual tax will also be applicable on hybrid vehicles.

Trump vs Musk — Why did Tesla stock fall?

• As Musk criticized the bill, Trump responded, saying Musk feared Tesla’s sales would be affected.
• Tesla’s stock fell 14% on June 5 — losing more than $150 billion in value.
• Already, Tesla is facing pressure in global markets:
• 36% drop in Germany
• 15% drop in China

Musk warned that if the tax credit ends, the entire EV market will be affected. However, he also said Tesla has a better ability to withstand it than other companies.

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What does it mean for the average EV owner and car buyer?

If this bill passes, then:

• Existing and new EV owners will have to pay a $250 tax annually.
• The tax credit will end, making it more expensive to buy an EV.
• Only a small number of buyers will get the benefit of the car loan interest deduction.

Should you prepare now?

• Those thinking of buying an EV may want to buy early to take advantage of the tax credit.
• Existing EV owners will have to add $250 to their annual expenses.
• The used EV market will also be affected as the used EV tax credit is also being eliminated.

Conclusion

This bill is now being deliberated in the US Senate. If passed and enacted into law, it is going to seriously undermine the US electric vehicle (EV) market. So, first, the federal tax credit that actually makes EVs cheaper would be eliminated and therefore, buying a new EV would not be that financially rewarding.In addition, every EV owner will have to pay an additional $250 in annual tax, which will increase their annual expenses. Although the government has made a provision for some rebate in interest on car loans, this rebate will be available only to a limited category of people falling below the high income limit.

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Rebecca